What Value does the Chia (XCH) crypto have?

Mr. Market shows some interest in Chia (XCH). CoinMarketCap named Chia, the 189th largest cryptocurrency, and gave it a $65.46 Coin Price on 22 April 2022.

So what is Chia and is it worth $65.46? Chia is an open-sourced blockchain built to be more environmentally friendly than Bitcoin (BTC) and Ethereum (ETH). One of the most popular criticism of cryptocurrencies is mining’s high energy consumption.

For instance, The New York Times estimates Bitcoin uses about 0.5% of the world’s total energy consumption. Bitcoin’s total energy consumption is seven times that of Alphabet (GOOGL) or Google, Business Insider claims.

A Cheaper Environmentally-Friendly Blockchain

In particular, Bitcoin miners used around 91 terawatts of electricity a year in 2021, Business Insider speculates. To explain, a terawatt is one trillion watts of electricity.

Hence, Business Insider alleges Bitcoin uses 91 trillion watts of electricity a year. In contrast, Ethereum (ETH) consumed 106.35 terawatts or 106.34 trillion watts of electricity a year in April 2022, Digicomist estimates.

They claim Chia (XCH) uses 0.16% of the annual energy consumption of Bitcoin and 0.36% the energy consumption of Ethereum. I estimate Chia uses 0.1456 terawatts or 145.6 billion watts of electricity a year, based on this claim and Business Insider’s data.

If the energy claims are true, Chia could sremove two of the greatest obstacles to cryptocurrency adoption. First, Chia reduces the high energy cost, which makes cryptocurrency expensive.

Second, Chia counters political pressure to ban or limit cryptocurrency use. Such pressures arise because of fears of Climate Change and popular anger at high energy costs. Chia can reduce such opposition by lowering energy consumption and costs.

What is Chia?

Chia (XCH) is a decentralized blockchain built with a Proof-of-Space and Time-Consensus to reduce energy consumption.

They claim Chia is the first blockchain that employees a Nakamoto Consensus built since 2009. A Nakamoto Consensus is a set of rules that makes a computer network of independent distributed nodes possible. The typical Nakamoto Consensus uses a proof-of-work consensus algorithm on a Byzantine Fault Tolerance peer-to-peer network to keep transactions private and secure.

Proof-of-work is the idea that miners support a cryptocurrency and a blockchain with work or computer power. I think Proof-of-Space-and-Time is the idea that a blockchain can show it can process a large volume of transactions.

Does Chia Solve the Blockchain Scalability Problem?

Hence, Proof-of-Space-and-Time eliminates the need to keep growing a blockchain to accommodate transactions. To elaborate, blockchains have a small capacity because of all the encryption. Hence, those chains, such as Bitcoin, can only process a few transactions per second (TPS). Worse, it is often hard to tell what capacity a chain has.

In contrast, Proof-of-Space-and-Time shows users how much capacity the blockchain has so they know what they can process. This means no additional blocks or mining is necessary to expand the blockchain to handle more transactions. The Chia blockchain is enormous. They claim it has 350,000 nodes.

Therefore, Proof-of-Space-and-Time could be a partial solution to the blockchain scalability problem. The scalability problem is the blockchain’s lack of speed and capacity. An interesting way to think of Proof-of-Space-and-Time is as Proof-of-Speed-and-Capacity.

They regulate Chia

Strangely, Chia (XCH) is one of the few blockchain projects to admit it is a profit-making business. To that end, they plan to make Chia a public-reporting company subject to the US Securities Act of 1933.

Hence, Chia could become a publicly traded company they can list on stock exchanges. In particular, they claim the Commodities Futures Trading Commission (CFTC) could regulate Chia. Hence, the US federal government could regulate Chia because the CFTC is a federal agency.

Interestingly, Chia has its own blockchain programming language they call Chialisp. They hope Chialisp will create a better on-chain smart transaction development environment that will offer more security, transparency, and ease of use than other cryptocurrencies.

Chia Tokens

In particular, Chialisp is an LISP-like programming language that allows Chia to store and release funds through smart contracts. LISP is a 60-year-old programming language that is a proven technology. In particular, Chialisp could let programmers modify source code during program evaluation.

They claim you can use Chialisp to build smart coins that enforce rules, for example, stablecoins that make payment in fiat currencies. They claim lisp programs allow developers to build layers of smart coins to control the output of funds.

Users can also create Chia Asset Tokens (CATs). The CATs can represent fiat currencies, stocks, voting shares, and other assets. They can also build single-use coins they call Singletons. The Chia Network pooling protocol verifies that Singleton funds are in a pool. They can also make Singletons as nonfungible tokens (NFTs).

Hence, they build Chia for decentralized finance (DeFi) and peer-to-peer transactions.

How Popular is Chia?

Chia (XCH) has some popularity. For instance, CoinmarketCap estimated Chia was the 192nd largest cryptocurrency on 19 April 2022.

Impressively, the Government of Costa Rica selected Chia as an open-sourced partner for blockchain payments. Chia and Costa Rica’s government have a Memorandum of Understanding to develop an open-source blockchain and smart transaction platform in the Central American republic. The Costa Ricans plan to use Chia to manage carbon credits.

“The Government of Costa Rica selected Chia as an open-source partner due to both its technical software and open-source expertise, but also the platform’s commitment to secure, sustainable, inclusive blockchain technology and immutable data storage,”  Andrea Meza Murillo announced. Murillo is the Minister of Environment and Energy of Costa Rica.

Chia is a Cryptocurrency to Watch

One reason for all the respect Chia receives is that Bram Cohen created it. Cohen invented BitTorrent peer-to-peer (P2P) protocol. They claim BitTorrent is the World’s most popular Torrent Client.

CoinMarketCap gave Chia a $65.43 Coin Price, a $244.626 million Market Cap, a $1.472 billion Fully Diluted Market Cap, and a 24-Hour Market Volume of $22.612 million on 22 April 2022. They base those numbers on a Circulating Supply of 3.739 million XCH.

In contrast, CoinBase gave Chia a $65.45 Coin Price, a $244.6 million Market Cap, and a 24-Hour Market Volume of $22.7million. They based numbers on a Circulating Supply of 3.7 million XCH. Chia is a highly unstable cryptocurrency because it has a $1,934.51 all-time high Coin Price.

I think Chia is a cryptocurrency to watch because of the public corporation plans and the Memorandum of Understanding with Costa Rica. If Chia becomes the first regulated cryptocurrency and the carbon-credit cryptocurrency, I think it could achieve enormous value.

Originally published at https://marketmadhouse.com on April 21, 2022.